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"Revenue per user is a very misleading way to evaluate the value when talking about a hyper-global operation." It doesn't matter, because there's no way to tor

by jerf 6y ago

"Revenue per user is a very misleading way to evaluate the value when talking about a hyper-global operation." It doesn't matter, because there's no way to torture the data until "the amount of money that Facebook can afford to remit to its users for giving them their data" is going to be anything significant. They can't afford anything "per user" or any significant number of users. If it were, say, $500 dollars a year, and we were arguing about whether we were an order of magnitude low or high, it might matter, because the difference between $50/yr and $5000/year is pretty significant. But you're never going to get so much as "Facebook can pay most users $15/month for their data" let alone anything worth it to anybody. Also, I've seen people hypothesize about these other values that this data might bring before, but bear in mind I'm operating my analysis based on Facebook overall revenue. There is no hypothetical 10x or 100x amount of value sitting around in the data, which we know, because otherwise Facebook would be collecting some significant amount of the value and it would be showing up in their revenue. The fact I'm basing this sort of analysis on revenue rather than profit is already an ENORMOUS concession to the idea, just staggeringly huge, and even with that concession it's a couple of orders of magnitude away from making sense. If you think there's some huge untapped source of revenue here that might make the idea work, show it to me. Show me the company and their revenue. There's Google, and then it falls off a cliff.

dTal 6y ago
Seems like this is putting the cart before the horse. Why should we care what Facebook can and can't afford? We don't owe them a business model. The point of this is to remit to the user the value that has been extracted from them. If Facebook cannot make money, i.e. contribute value, on top of that, then they are actually a drain on society surviving off negative externalities and should go. Deciding how much a user's data is worth is an exercise for the reader, but I would certainly pay much more to avoid Facebook, than Facebook would pay to have me[0]. That's a red flag. [0] - as would anyone who has ever added a Facebook domain to a Pi-Hole, the total cost of which likely exceeds Facebook's per-user revenue by your numbers.
- TuringNYC 6y ago
  How would this work for, say, Google. Say they cut users a check and their business model no longer worked. Would they then charge for searches? Would users have the option to keep free searches in lieu of a payment?
  - Ericson2314 6y ago
    Yes right now it's just assumed your value, your cost, their value, and their cost all balance out. But let's slap some numbers and everything and actually see if it does. If we have the option to pay up front, or sell off my data and maybe end up in the red or black. It will all be very complex in the end, but that's just exposing the inherent complexity that already exists and is just papered over.
    - yibg 6y ago
      What number would that be though? Any number is going to be made up and subjective based on the individual. I might day my data is worth $1000 a year while it’s worth $1 to you.
      - TuringNYC 6y ago
        If there is a pay option, you could just pay for searches. You set the price threshold by choosing to pay a la carte (or not.)
        paulryanrogers 6y ago
        Google did have a contributor program for a while which replaced ads when you paid them and they in turn paid the websites and services you visited. My guess is the advertisers weren't happy to be cut out of the loop.
        Ericson2314 6y ago
        Right, so (and not to make Google look like the good guy here) we just need this new law to tip the scales so the advertisers won't be able to convince Google not to do this.
acituan 6y ago
> They can't afford anything "per user" or any significant number of users. That was my point. In this thought exercise, we ought to separate the amount paid to users by country, because it will differ as much as a few orders of magnitude per country, just as the per user revenue most probably does. That is roughly the scale of GDP per capita per country between 1st world and 3rd world countries, which would be a good proxy for ad markets. I agree with rest of your argument, if per person revenue in the US was $150, would that be enough to make users care? It is unknown. > If you think there's some huge untapped source of revenue here that might make the idea work, show it to me I will concede that I am leveling an argument that entirely hinges on a hypothetical. But I don't think it is fantastical. The core of the problem is information asymmetry. These companies have huge amounts of high resolution data on us, but we don't have anything about the breakdown and how they operationalize that data. The argument that "if there was more ways to milk money out of it, we would have seen that in revenue" has several drawbacks in my opinion for several reasons. a) The data doesn't have to be used in ways that translate to quarterly revenue but still great value to the company; this includes back channel uses (elections, famously brexit, that was won by data, and it is hard to put a revenue tag to its effects), it also includes expenditures such as acquisitions of competitors (famously instagram and whatsapp, I don't doubt for a second facebook made use of their data to assess the viability of these acquisitions), or temporarily unused data for game theoretic reasons ("I don't want to expose the fact that I can utilize racial data, health data, covert speech recognition data on my users as long as I can, but if market conditions/lobbying efforts are fruitful, I will translate that to revenue"). b) Even directly revenue increasing uses of data is subject to R&D and mining day in day out. So new combinations of existing data can be figured out, or new products might potentiate existing data to be more valuable without preceding revenue footprints. Think about self driving cars; how traffic operated has been public data, individual sensor technologies aren't that novel, but self-driving car is joining all this together in the hope of converting that data into revenue. When it does, it will be a phase shift that tremendously increases the value of that data, and we will have not been wiser to it if we only watched the revenue. I'm not suggesting FB is necessarily after such an exponential tech, but it is to keep in mind the potentiality stored with data is not readily observable, so “show me it can translate into revenue” criteria can be failed for a long while despite the fact that it eventually can.

by jerf 6y ago

dTal 6y ago

Seems like this is putting the cart before the horse. Why should we care what Facebook can and can't afford? We don't owe them a business model. The point of this is to remit to the user the value that has been extracted from them. If Facebook cannot make money, i.e. contribute value, on top of that, then they are actually a drain on society surviving off negative externalities and should go. Deciding how much a user's data is worth is an exercise for the reader, but I would certainly pay much more to avoid Facebook, than Facebook would pay to have me[0]. That's a red flag. [0] - as would anyone who has ever added a Facebook domain to a Pi-Hole, the total cost of which likely exceeds Facebook's per-user revenue by your numbers.

TuringNYC 6y ago
How would this work for, say, Google. Say they cut users a check and their business model no longer worked. Would they then charge for searches? Would users have the option to keep free searches in lieu of a payment?
- Ericson2314 6y ago
  Yes right now it's just assumed your value, your cost, their value, and their cost all balance out. But let's slap some numbers and everything and actually see if it does. If we have the option to pay up front, or sell off my data and maybe end up in the red or black. It will all be very complex in the end, but that's just exposing the inherent complexity that already exists and is just papered over.
  - yibg 6y ago
    What number would that be though? Any number is going to be made up and subjective based on the individual. I might day my data is worth $1000 a year while it’s worth $1 to you.
    - TuringNYC 6y ago
      If there is a pay option, you could just pay for searches. You set the price threshold by choosing to pay a la carte (or not.)
      - paulryanrogers 6y ago
        Google did have a contributor program for a while which replaced ads when you paid them and they in turn paid the websites and services you visited. My guess is the advertisers weren't happy to be cut out of the loop.
        Ericson2314 6y ago
        Right, so (and not to make Google look like the good guy here) we just need this new law to tip the scales so the advertisers won't be able to convince Google not to do this.

acituan 6y ago

> They can't afford anything "per user" or any significant number of users. That was my point. In this thought exercise, we ought to separate the amount paid to users by country, because it will differ as much as a few orders of magnitude per country, just as the per user revenue most probably does. That is roughly the scale of GDP per capita per country between 1st world and 3rd world countries, which would be a good proxy for ad markets. I agree with rest of your argument, if per person revenue in the US was $150, would that be enough to make users care? It is unknown. > If you think there's some huge untapped source of revenue here that might make the idea work, show it to me I will concede that I am leveling an argument that entirely hinges on a hypothetical. But I don't think it is fantastical. The core of the problem is information asymmetry. These companies have huge amounts of high resolution data on us, but we don't have anything about the breakdown and how they operationalize that data. The argument that "if there was more ways to milk money out of it, we would have seen that in revenue" has several drawbacks in my opinion for several reasons. a) The data doesn't have to be used in ways that translate to quarterly revenue but still great value to the company; this includes back channel uses (elections, famously brexit, that was won by data, and it is hard to put a revenue tag to its effects), it also includes expenditures such as acquisitions of competitors (famously instagram and whatsapp, I don't doubt for a second facebook made use of their data to assess the viability of these acquisitions), or temporarily unused data for game theoretic reasons ("I don't want to expose the fact that I can utilize racial data, health data, covert speech recognition data on my users as long as I can, but if market conditions/lobbying efforts are fruitful, I will translate that to revenue"). b) Even directly revenue increasing uses of data is subject to R&D and mining day in day out. So new combinations of existing data can be figured out, or new products might potentiate existing data to be more valuable without preceding revenue footprints. Think about self driving cars; how traffic operated has been public data, individual sensor technologies aren't that novel, but self-driving car is joining all this together in the hope of converting that data into revenue. When it does, it will be a phase shift that tremendously increases the value of that data, and we will have not been wiser to it if we only watched the revenue. I'm not suggesting FB is necessarily after such an exponential tech, but it is to keep in mind the potentiality stored with data is not readily observable, so “show me it can translate into revenue” criteria can be failed for a long while despite the fact that it eventually can.